A California appeals court, responding to a U.S. Supreme Court ruling earlier this year, reduced one of the largest punitive damage awards in a product liability case by more than 90% on Tuesday, continuing a string of rollbacks in jumbo jury verdicts.
The $290-million punitive award against Ford Motor Co. was cut to $23 million by the 5th District Court of Appeal, the same court that earlier had upheld the jury verdict sought by plaintiffs to teach the automaker a lesson.
In Tuesday's opinion, the appellate justices said that although it was appropriate for juries to use punitive awards to punish defendants and deter bad behavior, such discipline must be aimed at redressing the conduct in the case at hand. Punitive damages, the court said, may no longer be used to sanction a broad course of conduct, such as the production of a defective line of cars.
The decision marks a turnaround from the way courts have treated punitive damages since the Ford Pinto case more than 20 years ago. In that case, another California appellate court wrote in 1981 that punitive damages "remain the most effective remedy for consumer protection against defectively designed mass produced articles" when regulations and criminal laws fail to protect the public.
The latest Ford case stems from a 1993 accident in the San Jaoquin Valley that left three members of a family dead. Siblings Juan, Evangelina and Maria Romo sued the firm after surviving the crash on Interstate 5 near Turlock. Their parents, Ramon, 39, and Salustia, 40, and brother, Ramiro, 18, were killed when their 1978 Bronco rolled over and the roof collapsed.
The roof was constructed of metal and fiberglass, a design that Ford later strengthened -- without recalling earlier models.
Rosemary Shahan, president of Consumers for Auto Reliability and Safety, described Tuesday's decision and punitive damage limits generally as "very troubling because the only place ordinary people can turn now to change corporate conduct is the court, and this will make it a lot harder for the courts to rein in" corporate misconduct.
Shahan said she believed the jury wanted to get Ford to change its behavior, if only to avoid huge verdicts in the future. Ford can treat reduced damages "as part of the cost of doing business," she said, and that "doesn't change their behavior."
The state and national chambers of commerce, along with other business groups, had supported Ford's battle to winnow the award, which Ford described as the largest punitive damage verdict affirmed on appeal.
In its opinion, the California appellate court cut the verdict to bring it in line with the Supreme Court's holding in a separate case in April. In that case, State Farm Mutual Automobile Insurance Co. vs. Campbell, the high court held that punitive awards in excess of nine times compensatory damages could be considered unconstitutional.
The revised punitive award in the Bronco case is about five times what the jury had set for compensatory damages.
"We are pleased that the court has recognized that State Farm fundamentally altered the standards governing punitive damages and that the court has significantly reduced this award," said Ford lawyer Theodore J. Boutrous Jr.
Erwin Chemerinsky, who represented the Romos in the appeal, said the family has several options, including appeals to the California Supreme Court and the U.S. Supreme Court. The Romos also could ask for a new jury trial on punitive damages only.
"It's very surprising that the court that upheld this 17 months ago reduced it this much, and I think it's based on a misreading of the U.S. Supreme Court in State Farm vs. Campbell," Chemerinsky said.
The Bronco verdict was the largest punitive damage award among 11 cases that the Supreme Court sent back to lower courts, which have begun reducing them in accordance with its State Farm case opinion. In one of them, the Supreme Court last month set aside a $79.5-million verdict in the lung cancer death of a janitor against cigarette maker Philip Morris, sending it back to an Oregon court for reconsideration.
The State Farm opinion also has influenced lower courts. In September, a state appeals court in San Francisco cut a punitive award to a former smoker with lung cancer from $25 million to $9 million.